Ethanol and Biodiesel Benefit from Energy Bill

Ethanol and biodiesel, with their strong farm-belt political sway, were among the big renewable energy winners in the recently-passed federal energy bill. The energy bill contains a Renewable Fuels Standard (RFS) that calls for a minimum of 7.5 billion gallons of ethanol and biodiesel to be used across the nation by 2012.

The Senate passed the energy bill last week by a margin of 74 to 26, while the House passed the legislation by a vote of 275 to 176. President Bush is expected to sign the measures into law within the next few weeks. “Passage of the aggressive Renewable Fuels Standard is also a significant victory for farmers and rural America,” said Brian Jennings, Executive Vice President of the American Coalition for Ethanol (ACE). “The ethanol industry has expanded thanks to farmers and local investors taking the initiative to add value to crops and create jobs in rural communities, and doubling the market for ethanol will help secure their investment and hard work.” By the end of this year, the U.S. ethanol industry is expected to have the capacity to produce 4 billion gallons of ethanol annually. With the nation’s demand for gasoline reaching upwards of 140 billion gallons, there remains much room for growth in the use and production of ethanol. The energy bill also contains these items: – Elimination of the reformulated gasoline program’s (RFG) oxygen standard. – Flexibility for refiners to use ethanol where it makes the most sense. – A 12-month limit on the life of credits generated under the RFS program to safeguard the ethanol market. – Language ensuring states cannot easily waive the RFS program. – No liability protection for MTBE. – Modernizing the Small Ethanol Producer Tax Credit so facilities producing less than 60 million gallons per year can participate.

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